Management’s Discussion and Analysis
INTRODUCTION The Management’s Discussion and Analysis (MD&A) highlights the primary factors that affected SaskEnergy’s consolidated financial performance for the 12 months ending March 31, 2021. Using financial and operating results as its basis, the MD&A describes the Corporation’s past performance and future prospects, enabling readers to view SaskEnergy from the perspective of management. The MD&A is presented as at May 19, 2021, and should be read in conjunction with the Corporation’s audited consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The MD&A contains certain forward-looking statements that are subject to inherent uncertainties and risks. Many of these risks are described in the Risk Management and Disclosure section of the MD&A. All forward-looking statements reflect the Corporation’s best estimates and assumptions based on information available at the time the statements were made. However, actual results and events may vary significantly from those included in, contemplated by, or implied by such statements. The Corporation’s financial results are subject to variation, especially given the volatility of natural gas prices. In order to compare financial performance from period to period, the Corporation uses the following measures: income before unrealized market value adjustments; realized margin on commodity sales; and realized margin on asset optimization sales. Each measure removes the impact of fair value adjustments on financial and derivative instruments and the revaluation of natural gas in storage to the lower of cost and net realizable value. Unrealized market value adjustments vary considerably with the market prices of natural gas, drive significant changes in the Corporation’s consolidated net income and may obscure other business factors that are also important to understanding the Corporation’s financial results. The measures referred to above are non-IFRS measures, in that there is no standardized definition, and may not be comparable to similar measures presented by other entities. STRATEGIC SCORECARD MEASURES In late 2020-21, SaskEnergy introduced a Corporate Plan that focuses on strategies to address the rapidly changing operating environment. The Plan includes a new vision, corporate vision, mission, values and strategic imperatives, which align with the Crown Sector Strategic Priorities identified by CIC.
To meet the Corporation’s strategic imperatives and create value for customers, SaskEnergy will improve operational efficiency and focus on sustainability — providing reliable, affordable energy to customers while recognizing their desire for a cleaner energy future. SaskEnergy is committed to reducing the impact of daily operations on the environment and to assisting customers in reducing their end-use emissions. This will be achieved by increasing budgets for energy efficiency and low carbon programs for customers. The Corporation will also continue to reduce emissions from internal operations through environmental and sustainability programs. At the same time, SaskEnergy will support Saskatchewan’s economy now and in the future by investing in the communities it serves by buying local, enhancing procurement processes, and rewarding vendors that demonstrate Saskatchewan content and Indigenous participation. SaskEnergy’s success is driven by its employees, and they are recognized for the value they provide, their diversity, and their role in the Corporation’s future sustainability. Each year, as part of the strategic planning process, SaskEnergy aligns performance metrics in the scorecard to track progress toward achieving its strategy. The final scorecard, including metrics and targets for the five-year planning horizon, is presented to SaskEnergy’s Board of Directors as part of the annual Corporate Plan approval. The CIC Board reviews the Plan and confirms compliance with the Crown Sector Strategic Priorities prior to its approval. Progress toward these targets is monitored and reported throughout the year, allowing management to take any corrective action to achieve the targets. SaskEnergy’s balanced scorecard is focused on four quadrants — Organizational, Operations, Financial and Customer. Strategic actions within the Organizational and Operations quadrants will produce desired results in the Customer and Financial quadrants. The following discussion outlines the Corporation’s 2020-21 performance relative to its strategic scorecard targets for the 12 months ending March 31, 2021, and provides targets for the new measures identified within the Plan. All measures are defined in the Glossary of Key Success Measures.
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